In human patients infected with hepatitis B virus (HBV) seroconversion from HBe to anti-HBe often signals virus elimination. Occasionally, a second viremic phase is observed which may be due to superinfection with a variant or reactivation of a latent virus. To differentiate between these two possibilities we investigated the nucleotide sequences of virus populations from sera of a chronically infected patient who had two distinct viremic phases, one e-antigen positive and one anti-HBe antibody positive. By direct sequencing of amplified HBV C- and pre-S gene sequences we found that the viruses in the two populations differed by only two point mutations, one of which prevents expression of precore derived e-antigen. In the nonviremic phase viral DNA and antigen were found in the liver but nucleocapsid protein expression appeared drastically downregulated. These data demonstrate that HBV can enter a latent phase with low expression of core protein and selection for HBV variants which cannot synthesize e-antigen. This suggests that e-antigen expression can be a critical target for virus elimination and that loss of its expression can prolong chronicity and provoke latency of HBV infection.